Should You Own Walmart for Its Dividend King Status or Costco for Its Special Dividend? Here's the Answer.
Key Points
Walmart has increased its dividend payout for 53 consecutive years.
In addition to a quarterly dividend payment, Costco also offers special dividend payouts.
Costco's last special dividend payment was $15 per share in 2024.
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Walmart (NASDAQ: WMT) and Costco Wholesale (NASDAQ: COST) are both recession-resistant businesses, as they offer products people will buy no matter how tight their budgets. They also each reward their shareholders with quarterly dividend payouts, with Walmart's yielding 0.8% and Costco's 0.6%.
That said, each has unique payout characteristics, as Walmart is a Dividend King, having increased its payout for 50 or more consecutive years. In addition to its quarterly dividend payouts, Costco has paid a special dividend every few years.
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I like both Walmart and Costco as investments, and Costco is alluring because of its special dividend payout.
Here's what those special dividend payouts have looked like over the last several years:
- 2024 payout: $15 per share
- 2020 payout: $10 per share
- 2017 payout: $7 per share
- 2012 payout: $7 per share
The catch, however, is that those payments aren't guaranteed to happen at any certain time. That creates a guessing game about when the compoany might pay one, which is why the special dividend payout shouldn't be the sole reason why someone should consider investing in Costco.
In comparison, as a Dividend King that has increased its dividend payout for 53 consecutive years, Walmart offers greater reliability and consistency for income.
That's why, if I could only choose one stock, I would go with Walmart. Finding the right income-paying stock is all about consistency, and there's nothing in the foreseeable future that suggests Walmart will be derailed from its ability to continue boosting its dividend payments.
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Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.
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